He says future projections indicate more domestic demand for beef in 2011 and into 2012. “The combination of the domestic demand and export strength paint a good picture for the cattle market.”

U.S. cattlemen are producing more Choice cattle than they were a year ago, Gleghorn says. “Choice and Select are both appreciating at a fast pace.

“Also, we’re now marketing cattle that are 5-7 lbs. heavier. Better technology and better management are keys to pulling more performance out of cattle.”

He says the prolonged drought is affecting herd numbers as ranchers move animals into feedyards because of forage shortage and feed expense. He anticipates that every month in 2012 will see “substantially fewer cattle” than the same month in 2011.

The Southwest is not the only region that’s liquidating herds, however, but he says the trend for heifer slaughter is down though it spiked in the first and second quarter of 2011.

Discussing volatility in live cattle futures contracts, Gleghorn says outside influences have an impact. “We see a lot of money coming in that has nothing to do with cattle.” And, that situation has become more pronounced since credit position limits were increased after 1993. Those limits have increased significantly in recent years.

“That creates some volatility," Gleghorn says. It’s also a factor in the corn market.